Digital advertising has been steadily on the rise as consumers invest more time online. In 2017, digital ad spend accounted for 41% of the market reaching $209 billion. It shows no sign of slowing down either, with digital ad spending projected to grow to $237 billion in 2018.
However, this undeniable secular trend obscures the fact that growth in ads and related spending online doesn't necessarily suggest that such ads are popular or even, in the most fundamental sense, effective. In fact, whether it's credentialed research by the Center for Democracy and Technology or just common sense and personal experience, it's clear that the increase in online ads is also accelerating the friction and lack of trust between consumers and those who want to sell to them.
Whether you are checking the weather, logging onto favorite sites or looking up a good book, we as consumers are haunted by online purchases and searches past. Advertisements have invaded nearly every corner of their online real estate – resulting in an intrusive, potentially creepy, environment.
While personalized ads clearly perform better than those that are not targeted, the fact that such ads are targeted using personal information that people are uncertain how and when they provided can be frightening. Moreover, the examples of errors or assumptions based on personal data made by algorithms employed by ad platforms and consumer websites continue to proliferate.
For years now, big data companies like Facebook and Google have been the gatekeepers for most of the data used to drive digital advertising efforts. In fact, together they own 60-70% of the market share in the US alone. And it doesn't necessarily work. After advertisers release their content, it's subject to false impressions – which is costing them upwards of 9% of their advertising spend, or cumulatively $19 billion in 2018.
That's a lot of wasted money, a lot of wasted impressions and also wasted trust – all due to a poorly executed combination of legacy and new technology. In a world of TV and radio with just a few channels or local stations, ads that interrupted the programming were arguably necessary and effective. Similarly, extra pages in a newspaper or magazine made sense and could even be interesting. In a world of information on demand and infinite channels, however, infinite interruption – especially freakishly specific interruptions – is neither necessary nor as effective as it might have been historically. But the habit of interruption persists.
At this point, there's got to be a better way – and one option is to use a different combination of tech. Specifically, distributed ledger software, more commonly known as blockchain, properly combined with the web and ad platforms, could reinvent the entire value exchange between consumers and advertisers.
Information accessible via blockchain exists on a shared database, hosted by countless computers versus a single location. This makes data public and accessible to anyone online, so there are fewer vulnerabilities for hackers to exploit. Once data is recorded, it can't be altered or destroyed – creating better transparency and security. By leveraging a decentralized network, blockchain could, for instance, help stop fraudulent advertising schemes. Yet far more importantly, blockchain gives power back to the people, allowing them to better protect their data, own how they make it available to advertisers and ultimately monetize it.
Picture a simple, downloadable app – in which an individual could place certain personal information, and permission advertisers to direct content to that app, based on selective disclosure of some or all of that information, in return for compensation by the advertiser. In short, picture a world where consumer-spending impact derives directly from individual permissioning of personally identifiable information, or "personal data spending power."
For ad buyers, such an app would make consumer preferences less of a moving target. Advertisers will be able to access pools of customers who are specifically interested in their offerings, and engage these people directly – while absorbing feedback that will help focus future campaigns. In short, advertisers have better confidence on their ad spend. On the consumer side, individuals would directly control, select and permission what data they offered, what ads or content they see and what value they get from offering up their time and attention.
Imagine you are a huge Marvel fan. When Marvel is prepping its ad campaign, it can use a blockchain service to identify appropriate viewers to push its latest movie trailer to. As the consumer, since you've identified this as an area of interest, you engage content you want and then get paid to view it. Instead of going to YouTube to watch it anyway out of excitement, you can watch it via third-party system and make money doing so. That's where we're headed with blockchain – a win-win for advertisers and consumers.
The payment? Another application of blockchain, e.g., cryptocurrency – which currently is far too hard and/or mysterious for the average consumer to use, exchange or even understand. Imagine that as part of the simple, downloadable app, digital currency could also be exchanged, tracked and managed, all as part of a better, permissioned interaction. In short, imagine that cryptocurrencies could become more mainstream and useful, all as part of huge and already valuable ad market.
Many companies, including ours, are working on various aspects of this kind of technological re-boot – but too few advertisers, investors and potential early adopters really understand what's at stake.
With blockchain, digital advertising ceases to be a one-way street where advertisers can leverage consumer data via conduits like Facebook, and creates mutually acceptable boundaries where consumers can choose what information to share and what content they see in return. Working in system, consumers are then compensated for what they view, which given the cataclysmic loss of ad dollars, is a better way to allocate a percentage of what advertisers spend.
Blockchain has the potential to upend several industries, putting would-be fraudsters out of the game. Within digital advertising, blockchain will be the driving force for a much-needed seismic shift. More trust, greater control, and ultimately with giving consumers data ownership and advertisers better direction, it means more money. And who doesn't like all three?